Small business owners, do you want the good news or the bad news first? The good news: signs point to the conclusion that the economy is once again strengthening and consumer confidence is growing. The bad news is that small businesses will continue experiencing an increase in operating costs into 2010.
Growing Expenses for 2010
According to the Business Inflation Guide (BIG) published by More Th>n Business, a small business resource located in the UK, commodity prices rose in the 3rd quarter of 2009 and are expected to continue rising into July of 2010. The BIG is a helpful guide that measures 20 of the most frequent expense items for small businesses.
Costs that are on the rise include fuel and vehicle costs, raw materials, capital equipment, telecommunication, and electricity. However, some costs are seeing declines, such as labor, insurance, rent, as well as large decreases in natural gas costs.
What does the BIG report mean for small businesses? For the most part, it means that small business owners need to carefully manage their cash flow and keep a close eye on operating expenses.
The Industries Most Impacted by Rising Costs
The statistics show that manufacturing businesses are likely to experience higher expenses than service businesses. Particularly, small manufacturers or industrial firms should watch for higher prices from material suppliers. Perhaps these business owners might look for optional suppliers or negotiate with current suppliers.
Operating costs should be managed carefully as well. Business owners need to limit costs for professional services, such as legal, accounting, and financial services. Utilities will likely see hikes on the balance sheet as well. Business owners and managers could set policies to reduce electricity and telecommunication usage. All types of small businesses that use vehicles will need to keep a close tab on fuel and leasing costs.
Although the BIG report is researched and published in Great Britain, there are still lessons to be learned for American small businesses. The economy is once again on a path to steady growth. Although expenses for certain operating and material costs may be rising, it’s good news to be spending money to make money in 2010.